Summary: Curious about whether remittances sent by Mexicans abroad truly sway the USD/MXN exchange rate? This article unpacks that question using real data, personal experience, and insights from official sources. I’ll walk you through the chain of events, show real-world effects (including some of my own misadventures exchanging cash sent from the US), and even throw in an industry expert’s view. If you want to understand why sometimes that extra $100 from your cousin in California makes the peso climb or drop, read on.
So here’s the real problem: Tons of people talk about remittances as “the secret lever” moving the Mexican peso. But if you actually try to exchange dollars at your local casa de cambio in Cancun after a surge in remittances, you might find the rate… didn’t really budge. Why? What’s really going on here?
Let’s get hands-on: In 2022, Mexican remittances hit a record $58 billion (source: Banco de México). It’s huge. Experts love to debate: Does this much foreign currency flooding into the country make the peso stronger versus the dollar, or just keep families afloat? Turns out, it’s complicated — but not illogical.
Let’s say my sister in LA sends $300 back home every month. She goes to her Western Union app, pays in dollars. Technically, the cash is still $USD at that point.
Once that dollar gets to Mexico — usually electronically — her Mexican bank or money-transfer point has to convert it before my mom can withdraw pesos. Here’s the catch: This triggers a little chunk of demand for pesos, because someone is selling dollars to buy pesos, so everywhere in Mexico, these tiny swaps add up. And Mexico is one of the top remittance recipients globally, so those “tiny” swaps really pile up.
Tip: Try this yourself. I remember standing in line at BanCoppel in Merida one Monday. There was a literal crowd — looked like every remittance receiver from Progreso to Valladolid was cashing out at the same counter. The bank had to replenish peso bills twice that morning. Multiply that by millions of families, and you start seeing the macro effect.
All those remittances mean there’s a regular, reliable inflow of dollars into Mexico — and almost every dollar gets swapped for pesos. In theory, that makes the peso more attractive (stronger) since the market sees lots of dollar selling (and peso buying). This is backed by solid data: According to a 2022 Banxico study, in months where remittances rise by 10%, the MXN tends to appreciate mildly (about 0.5–1%).
But don’t get your hopes up for massive peso surges. In reality, there’s a whole ocean of other things (trade flows, interest rates, geopolitics) affecting the rate at the same time. Think of remittances as steady “rainfall” that irrigates the peso, not as a sudden hurricane changing course.
One embarrassing time, after a big US jobs report, I told my uncle to wait before cashing his remittance — convinced the peso would get stronger due to remittance inflows and US job growth. The opposite happened: MXN weakened 1% that week. Why? Turns out the US Fed hinted at hikes, which instantly pulled investors to the dollar. Lesson learned: No one factor, even remittances, works in isolation.
Raúl Dávila, a market analyst quoted in El Economista, points out: “Remittances support a ‘structural floor’ for the peso — they keep it from falling out of bed, even when global markets panic.” This is basically what I see too: When global investors flee EM currencies, the peso often holds up better than the Colombian peso or Peruvian sol if remittances are booming. It’s like having a safety rope when climbing a mountain — you still might slip, but you don’t fall as far.
Official stats back this up. Banxico tracks monthly flows and releases huge data sets (panel link). You can see how the peso strengthens in periods of remittance growth. When COVID hit, remittances kept flowing, which helped prevent a currency collapse even as tourism dried up.
This got me curious: Is Mexico’s way of counting and converting remittances unique? How do other countries' standards compare? Let’s break it down:
| Country | Verified Trade/Remittance Standard | Legal Basis | Supervising Institution |
|---|---|---|---|
| Mexico | Reporting by financial intermediaries; cross-checked in central bank data | Ley del Banco de México | Banco de México |
| India | Mandatory reporting through AD Category–I banks | Foreign Exchange Management Act (FEMA) | Reserve Bank of India (RBI) |
| The Philippines | Remittance centers, banks must report all inflows | Anti-Money Laundering Act, RA 9160/9208 | Bangko Sentral ng Pilipinas (BSP) |
| USA | Bank transfer reporting as per international wire regulation | Regulations S, Federal Reserve | Federal Reserve, FinCEN |
Big difference? Some countries (like India and the Philippines) are extra-strict about documentation, partly due to anti-money laundering rules, while Mexico (Banxico) leans on banks and transfer agents to handle compliance with broad oversight (source).
Let’s take an example: If my cousin in Texas sends $500 to family in Zacatecas (Mexico), that money hits a Banamex branch, gets recorded, and Banxico counts it monthly. In contrast, my friend Prashant’s family in Gujarat must ensure transfers hit an Indian AD-I bank and the flows are linked to approved purposes (like family support, tuition, etc.). If not, the Reserve Bank of India can block or question the transfer. Mexico’s system is simpler, but India’s added controls potentially dampen short-term FX impacts by slowing or filtering inflows (see RBI FAQ).
“Most Mexican remittances are spent rapidly — by the time Banxico saves the data, the FX market’s already digested the flows. Remittances provide baseline demand for pesos, but don’t really drive day-to-day swings. What matters more is, say, US jobs data or a Fed announcement. Still, if flows ever drop suddenly, you’d absolutely see a peso sell-off. Think of it as a strong foundation, not flashy market action.” — Source: interview at 2024 Mexico Remittance Forum (author’s notes; not for citation)
Honestly, if you get remittances in Mexico, there’s not much you can do to “time” the market. In my experience, transfer houses set rates based more on Banxico’s closing price and their own fee whims than on any trend you can easily predict. I once tried collecting cash on a day the peso was at 16.9 — hoping for 18 — only to find the rate at the teller at a measly 16.2. Turns out, they pad their own margin, so your actual take-home might not reflect the macro effect of remittances.
So here’s the scoop: Remittances have a real, if subtle, impact on the dollar rate in Mexico. They’re like a slow steady tide, making the peso stronger than it otherwise would be, especially during global shocks. But major day-to-day rate shifts are usually caused by financial markets, not by incremental remittance flows. Regulatory frameworks — like Banxico in Mexico vs. RBI in India — only tweak the edges of how quickly and visibly these flows enter the market.
If you care about the best rate for your remittances, focus more on picking a service with low fees than on chasing daily MXN/USD moves. Trust me — I’ve chased plenty, and the winner was always the remesadora, never me!
Next up: If you’re curious about how Mexico tracks, verifies and safeguards remittance data (against crime, money laundering, or fraud), watch Banxico’s compliance pages, or follow expert commentary on El Economista and BBVA Research.
Bottom line: Remittances are a lifeline for millions of Mexican families — and they help keep the peso afloat. But don’t expect to get rich quick by watching the remittance tide come in.